January 2003
701P22140
Xerox Document Services Platform
Generic MICR
fundamentals
guide
Prepared by:
Xerox Corporation
Global Knowledge and Language Services
800 Philips Road Bldg. 845-17S
Webster, New York 14580
USA
©2003 by Xerox Corporation. All rights reserved.
Copyright protection claimed includes all forms and matters of copyrightable material and information
now allowed by statutory judicial law or hereinafter granted, including without limitation, material generated
from the software programs displayed on the screen such as icons, screen displays, or looks.
Printed in the United States of America.
XEROX® and all Xerox product names mentioned in this publication are trademarks of XEROX CORPORATION.
Other company trademarks are also acknowledged.
Changes are periodically made to this document. Changes, technical inaccuracies, and typographic
errors will be corrected
in subsequent editions.
Generic MICR Fundamentals Guide iii
Table of contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ix
About this guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .ix
How to use this guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . x
1. Overview. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1-1
A brief history . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-2
Why MICR? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
Check printing capabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-5
Check processing procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-6
Production cycle of a check . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-9
Changes in check creation role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1-11
2. Environment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2-1
Types of MICR applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Manufacturing checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-1
Issuing checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
Issuing turnaround documents . . . . . . . . . . . . . . . . . . . . . . . . . . 2-2
Printing financial forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
Xerox MICR printing systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-3
MICR printing technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-4
Printer technical optimization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5
Typical MICR printing concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2-5
3. Paper facts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
Paper guidelines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-1
MICR paper requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
Basis weight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-2
Sheffield smoothness scale . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-3
Grain direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-4
Moisture content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5
Reflectance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-5
Curl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
Perforation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-6
Metallic content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
Stiffness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-7
Cutting precision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8
Xerox paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-8
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iv Generic MICR Fundamentals Guide
Paper maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9
Wrapping factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9
Storage factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-9
Temperature and humidity conditions . . . . . . . . . . . . . . . . . . . 3-10
Paper runability criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-11
Preprinted forms considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13
Inks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-13
Security features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14
Duplication detection . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-14
Alteration prevention . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15
Application design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15
Numbered stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-15
Features to avoid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3-16
4. Document design. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4-1
Check document content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
Security features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-1
Background printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
Fixed information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
Date line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-2
Amount lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3
Payee line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-3
Signature lines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4
Name of financial institution . . . . . . . . . . . . . . . . . . . . . . . 4-4
Memo line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4
Account title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-4
Check serial number . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
Fractional routing number . . . . . . . . . . . . . . . . . . . . . . . . 4-5
MICR line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5
MICR line (clear band) format requirements . . . . . . . . . . . . . . . . . . . . . 4-5
Format specifications using E13B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
E13B character set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
E13B numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
E13B symbols . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
On-Us symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-7
Transit symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8
Amount symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8
Dash symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-8
E13B character design . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9
Field formats—E13B font . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-9
Document Specifications form . . . . . . . . . . . . . . . . . . . . 4-11
Amount field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13
On-Us field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13
Transit field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-13
External processing code (EPC) field . . . . . . . . . . . . . . 4-14
Auxiliary On-Us field . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
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Generic MICR Fundamentals Guide v
Field formats summary . . . . . . . . . . . . . . . . . . . . . . . . . 4-14
Character alignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
CMC7 font . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
CMC7 numbers and symbols . . . . . . . . . . . . . . . . . . . . . . . . . . 4-16
Character design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-18
MICR character spacing requirements . . . . . . . . . . . . . . . . . . . . . . . . 4-19
Character spacing algorithm for 300 dpi . . . . . . . . . . . . . . . . . . 4-19
Fixed pitch and proportional font spacing . . . . . . . . . . . . . . . . . 4-19
Check size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-23
Other application considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25
Two sided printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25
Perforations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25
Multiple-up printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-25
Readability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-27
5. Document processing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5-1
Proofing checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
Amount determination errors . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
Proofing equipment errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-2
Reader sorter function . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-3
Waveform generation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-4
Types of reader sorters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5
Waveform reader sorters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5
Matrix or AC reader sorters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-5
Optical reader sorters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Dual read magnetic reader sorters . . . . . . . . . . . . . . . . . . . . . . . 5-6
Hybrid magnetic and optical reader sorters . . . . . . . . . . . . . . . . 5-7
Processing speeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-7
Paper handling by reader sorters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
Hopper jogger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
Separator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-8
Aligner . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-9
Read/write heads . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-9
Item numbering and endorsing stations . . . . . . . . . . . . . . . . . . . 5-9
Microfilm or image capture unit . . . . . . . . . . . . . . . . . . . . . . . . . 5-9
Sorter pockets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10
Reject repair . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-10
6. Quality control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6-1
Print quality specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-1
Optical tools used to check MICR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
MICR Gauge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-2
Small Optical Comparator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
Magnetic testing equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-3
E13B calibration document . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-4
Testing sample documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-5
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vi Generic MICR Fundamentals Guide
Specifications for testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-6
Horizontal position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-6
Vertical position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
Skew . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-9
Character-to-character spacing . . . . . . . . . . . . . . . . . . . . . . . . 6-11
Voids . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-13
Extraneous ink spots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-14
Signal strength . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-17
Debossment and embossment . . . . . . . . . . . . . . . . . . . . . . . . . 6-20
Summary of ANSI standards . . . . . . . . . . . . . . . . . . . . . . . . . . 6-21
Additional performance considerations . . . . . . . . . . . . . . . . . . 6-22
Dry ink slivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22
Damaged or ragged characters . . . . . . . . . . . . . . . . . . . 6-22
Crayoning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22
Operational maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-22
Quality measurements: magnetic versus optical . . . . . . . . . . . . . . . . . 6-23
Magnetic testing equipment usage . . . . . . . . . . . . . . . . . . . . . . 6-23
Optical testing equipment usage . . . . . . . . . . . . . . . . . . . . . . . 6-25
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6-26
7. Problem solving. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7-1
When problem solving is required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
New accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
Existing applications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-1
Possible misinterpretations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2
Problem solving process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-2
Determining the problem source . . . . . . . . . . . . . . . . . . . . . . . . 7-4
Reader sorter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4
Printer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4
Operator training . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-4
Application software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5
Unknown cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5
Reader sorter testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-5
Interpreting test results . . . . . . . . . . . . . . . . . . . . . . . . . . 7-6
Questions to consider . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-7
Expected reject rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
Reducing reject rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-9
Inspecting documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-12
Correct font placement or format . . . . . . . . . . . . . . . . . . 7-12
MICR character defects . . . . . . . . . . . . . . . . . . . . . . . . . 7-12
Document damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-13
Excessive ink smears . . . . . . . . . . . . . . . . . . . . . . . . . . 7-13
Paper size and characteristics . . . . . . . . . . . . . . . . . . . . 7-13
MICR line format . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-13
Job history or results . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-14
Compare the documents with previous samples . . . . . . 7-14
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Generic MICR Fundamentals Guide vii
Analyzing reader sorter printout . . . . . . . . . . . . . . . . . . . . . . . . 7-14
Test patterns: alternative to reader sorter testing . . . . . . . . . . . 7-15
Verifying problem resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-16
8. Security. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8-1
Xerox printing systems security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-1
Physical security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-2
Restricting physical access . . . . . . . . . . . . . . . . . . . . . . . 8-2
Securing paper stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
Storage and disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-3
Responsible presence . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
Software security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
Logon levels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
Memory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-4
System commands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
Audit control processes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
Accounting information . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
Paper jams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-5
Samples . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-6
Tampering methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-7
Chemical tampering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-7
Mechanical tampering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-7
Modifying printed checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8
Lithographic printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8
Impact printing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-8
Cold pressure fix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
Xerography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-9
Preventing tampering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-10
Safety papers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
Overprints . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
Textures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-11
Amount limit statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12
Amount in Words fields . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12
Preventing check duplication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-12
Microprint . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-13
Watermarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-13
Drop-out print . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-13
Dataglyph™ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
VOID pantograph . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
Avoiding counterfeit and stolen checks . . . . . . . . . . . . . . . . . . . . . . . . 8-14
Alteration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-14
Embezzlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-15
Stolen checks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-16
Counterfeits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-16
Cost considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-17
Table of contents
viii Generic MICR Fundamentals Guide
A. References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .A-1
Standards documentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Instructions for ordering U. S. standards . . . . . . . . . . . . . . . . . . . . . . . . A-2
Ordering online . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2
Ordering hardcopy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2
Standards development process information (U. S. only) . . . . . A-3
Glossary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Glossary-1
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Index-1
Generic MICR Fundamentals Guide ix
Introduction
About this guide
The purpose of the Generic MICR Fundamentals Guide is to
provide a reference for the various facets of the MICR
environment within the context of the Xerox MICR printing
products. This document does not contain specific information
on individual Xerox MICR printers.
Since the printing of MICR documents involves application and
operational considerations not normally associated with any of
the standard Xerox printing systems, this document provides
principles and guidelines to ensure successful MICR printing.
This document has been developed with the assumption that
readers have knowledge of standard Xerox printing systems
products, and the skills to develop applications and job source
libraries.
The Generic MICR Fundamentals Guide contains the following
chapters and appendices:
Chapter 1: Overview. Describes MICR, its historical
background, and the printing and processing procedures for the
MICR document.
Chapter 2: Environment. Examines the types of applications
that use MICR, trends within the industry, and typical MICR
printing methods and concerns.
Chapter 3: Paper facts. Identifies paper grades and properties
required for MICR printing, and describes paper maintenance
procedures.
Chapter 4: Document design. Describes the standard format,
features, and requirements of a check document.
Chapter 5: Document processing. Examines the common
types of reader sorter technology and the way these systems
function.
Introduction
x Generic MICR Fundamentals Guide
Chapter 6: Quality control. Describes MICR document print
quality specifications, the tools available to determine if a
document is within specifications, and general operator
maintenance procedures.
Chapter 7: Problem solving. Provides information on
identifying MICR printer related problems and using rejection
rate information to isolate the problem source.
Chapter 8: Security. Provides an overview of the security
procedures used to control and audit access to a Xerox MICR
printing system and to check printing functions.
Appendix A: MICR references. Lists the domestic and
international standards documents that apply to MICR
publications. Also contains a list of Xerox documents containing
MICR information.
Glossary: Lists terms and definitions related to MICR printing
and banking environments.
How to use this guide
First, become thoroughly familiar with the operation of your
own MICR system.
Read through this guide to acquaint yourself with all of the
topics.
As needed, refer to sections of this guide that are pertinent to
your work.
Generic MICR Fundamentals Guide 1-1
1. Overview
MICR (Magnetic Ink Character Recognition) is a process by
which documents are printed using magnetic ink and special
fonts to create machine readable information for quick document
processing.
Although traditionally MICR has been used to print accounting
and routing information on bank checks and other negotiable
documents, the magnetic encoding lends itself to any form of
document processing.
The following figure shows a check with a MICR line. This line
contains block-shaped numbers running along the bottom of the
check, and non-numeric characters called “symbols.” This entire
string of numbers and symbols is printed using magnetic ink.
Figure 1-1. MICR line on a check
Overview
1-2 Generic MICR Fundamentals Guide
A brief history
Originally, checks were processed manually. However, by the
mid-1940s the banking system became inundated with paper as
society grew more mobile and affluent. Finding a means of
handling the growing number of paper documents became vital
to bankers. The banking and electronics industries searched for
a standard process that could be used in all banks throughout
the country.
In the mid-1950s, the first automated processing of checks was
initiated. The system that is now known as MICR was developed
by the Stanford Research Institute, using equipment designed by
the General Electric Computer Laboratory. The E13B MICR font
was also developed.
The specifications for producing the E13B font using magnetic
ink were accepted as a standard by the American Bankers
Association (ABA) in 1958. In April 1959, the ABA issued
Publication 147, The Common Machine Language for
Mechanized Check Handling.
Deluxe Check Printers had the task of translating the
specifications into a working process. By the end of 1959,
Deluxe successfully produced checks using magnetic ink.
In countries throughout the world there are groups that set
standards and dictate the design specifications for document
encoding, processing equipment, and quality criteria for MICR
printing. Some of these are:
American Banking Association (ABA)
American National Standards Institute (ANSI)
United Kingdom—Association for Payment Clearing Services
(APACS)
Canadian Payments Association (CPA)
Australian Bankers Association (ABA)
International Organization for Standardization (ISO)
France—L'Association Francaise de Normalisation
Overview
Generic MICR Fundamentals Guide 1-3
In 1963, the American National Standards Institute (ANSI)
accepted the ABA specifications, with minor revisions, as the
American standard for MICR printing. The ANSI publication
covering these standards is Print Specifications for Magnetic Ink
Character Recognition, first issued in 1969. Although compliance
with the standards is voluntary in the U. S., the banking industry
considers them to be the definitive basis for determining
acceptable quality of a MICR document.
Another MICR font, called CMC7, was developed by the French
computer company Machines Bull and has been the official
French standard since September 1964. The CMC7 font is also
used in other countries, including Italy, Spain, and Brazil. Like the
E13B font, CMC7 is a magnetically readable font, but with a
different character design and recognition criteria.
Some countries also use OCR-A or OCR-B, which are optically
read check processing fonts. These fonts do not need to be
printed with magnetic ink in order to be processed. The following
table shows which countries use the four check printing fonts.
Overview
1-4 Generic MICR Fundamentals Guide
Country E13B CMC7 OCR-A OCR-B
North America:
USA X
Canada X
Central America
Bermuda X
Mexico X
Panama X
South America:
Argentina X
Brazil X
Chile X
Columbia X
Ecuador X
Peru X
Uruguay X
Venezuela X
Europe:
Austria X
Belgium X X
Denmark X X
Finland X X
France X
Germany X
Holland X X
Italy X X
Norway X X
Spain X
Sweden X X
United Kingdom X X
Middle East and Africa:
Israel X
South Africa X
Far East:
Australia X
Hong Kong X
India X
Japan X X
Kuala Lumur X
Malaysia X
New Zealand X
Philippines X
Singapore X
Taiwan X
Thailand X
Overview
Generic MICR Fundamentals Guide 1-5
Recognizing significant market value in combining the
advantages of electronic laser xerography with MICR technology,
Xerox initiated investigations in late 1979 and early 1980. Early
efforts at the Xerox Webster Research Center concentrated on
basic material physics. The objective was to provide a
xerographic dry ink and developer that would produce high visual
quality images that could be read using the standard banking
reader sorter equipment.
Xerox’s MICR printing products combine the following:
A modified xerographic engine
A unique magnetic materials package
The standard ANSI and ISO MICR character sets
The Xerox MICR systems meet ANSI, CPA, and ISO
specifications for automatic check handling.
Why MICR?
MICR was chosen by the ABA because it can be read accurately
by machine, it uses existing printing technology, and the printed
documents are durable to withstand mutilation.
A MICR encoded document can be read through overstamping,
pen and pencil marks, oils and greases, and carbon smudges.
However, MICR printing is one of the most quality-conscious
application areas within the printing industry. It meets ABA
security requirements for negotiable documents. MICR is the
only system that produces reliable results at high processing
speed.
Check printing capabilities
A Xerox MICR printing system with a magnetic material package
and MICR fonts can print a character line at the bottom of a
check form that is machine readable by standard banking reader
sorter equipment. On blank security paper, the Xerox MICR
printing system can produce the entire check image, including
the form, all fixed and variable data, logos and signatures, and
the MICR line, in a single pass.
Overview
1-6 Generic MICR Fundamentals Guide
The printing process is one small part of the total processing
procedure for a MICR printing system user. Quality and accuracy
of the check documents must be closely controlled during
printing to prevent problems from occurring when the document
is processed off-site.
Check processing procedure
All checks impact at least three parties:
The person who writes the check
The person to whom the check is being paid
The bank at which the check writer has an account
Depending on where and by whom the check is deposited, how
the check is processed, and how the check is handled for funds
clearance, many different parties can handle the same check.
Fraud can occur at any of the steps or access points in this
process.
The following steps, illustrated in figure 1-2, trace a document
through a series of corporate and banking system procedures
typical of the MICR environment.
Overview
Generic MICR Fundamentals Guide 1-7
Figure 1-2. Life cycle of a check
Overview
1-8 Generic MICR Fundamentals Guide
1. The check printer (1) produces a blank check that will be
completed later. This check includes the static data that is
needed for a negotiable document:
Financial institution name and address, issuer name and
address, check form, company logo, etc.
The MICR line, containing the account and routing
information that is needed to process the check
Other audit, account, and report information as required
by the customer
2. The customer (2) adds the transaction information—payee,
amount, and date—and authorizes the funds transfer with a
signature.
NOTE: When using a MICR laser printer, steps 1 and 2 may
happen simultaneously.
3. The completed check is transferred to the payee (3), who
deposits it in the bank of first deposit (BOFD). The payee may
receive the check in person, by mail, or through a third party.
A third party check may require a second endorsement.
4. Deposits (4) are made in several ways: through a teller, using
an automated teller machine (ATM), using a drop box, or
through a postal lock box. Deposited items are accompanied
by a deposit ticket that lists and totals the items and identifies
the payee account.
This is the entry point for the automated payment processing
system.
5. The BOFD encodes the amount of the check in the MICR line
(5) and balances the check against the deposit ticket to verify
that the correct amount is being credited to the payee
account (proof of deposit).
6. MICR documents that are printed on a Xerox MICR printing
system are usually corporate paychecks, stock dividend
checks, etc. After printing, these type of documents require
additional processing using a high-speed device called a
“reader sorter.” The reader sorter identifies each magnetized
character and symbol of the MICR line using logical analysis
algorithms of the electronic wave patterns that the characters
produce.
In the “capture pass,” checks are read in a reader sorter for
the first time (6). At this time, they are sorted into checks
drawn on the BOFD, known as “On-us items” (8), and checks
drawn on other banks.
Overview
Generic MICR Fundamentals Guide 1-9
7. Checks drawn on other banks are sent to the payor bank
through a clearing (7) arrangement. The check may be
cleared through the Federal Reserve, a correspondent bank,
a clearing house, or directly by the issuing bank.
The payor bank also balances the check against the deposit
ticket (proof of deposit) (7a) to verify the check amount, and
performs its capture pass (7b) on the reader sorter in order to
identify the issuer account (7c). (Refer to the “Proofing
checks” section of chapter 5 for more information on this part
of the process.)
8. In most cases, the check is debited from the issuer account
and moved to bulk filing (8), where it is stored until time for
monthly statement rendering.
From this point forward, an On-Us item is treated the same as
one that was cleared to another bank.
Two exceptions may occur:
If the payor bank does not honor the check, it is returned
(9) through the BOFD to the payee. The amount is then
deducted from the payee account.
During reconciliation, the account holder may discover a
discrepancy (10) between its records and those of the
bank. Their bank then researches any discrepancies.
NOTE: Account holders may contract with their banks to
perform reconciliation before clearing the check.
Production cycle of a check
The check production process starts as soon as the need is
identified. Design requirements should comprehend purchasing,
distribution, warehousing, manufacturing, internal and external
processing requirements, and the needs of the check issuer.
Banks frequently require new corporate accounts to submit
checks for approval before the banks approve the account.
The following steps, illustrated in figure 1-4, describe the typical
process that is required before the first negotiable checks are
delivered to the payee.
Overview
1-10 Generic MICR Fundamentals Guide
Figure 1-3. Check ordering and production cycle
1. Design requirements are defined for a new account.
2. Requirements are passed to application development.
3. Samples pass internal quality checks.
4. Samples are forwarded to the bank for approval.
5. Any problems are referred to application developers, who
ensure that the problems cannot occur in production.
6. After approval by the bank, the check design becomes
available for routine production.
7. Variable check data is prepared for incorporation.
8. The checks are printed.
9. The printed checks are inspected.
10.Any problems are reported to the source for correction and
reprinting.
11.When they have passed bank validation and quality
inspection by the issuer, the checks are issued to the payee.
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